More house stuffs

Progress on the house continues - the valuation from the bank came back last Friday, with the excellent figure of $445,000, which represents a capital growth of like 8.5% since we signed the contract last year! It also means that our loan valuation ratio will be 75%, meaning no mortgage insurance and we should qualify easily for the rather excellent home loan package that we applied for.

We've also made some movement on curtains, after an initial set back. The set back was that the fabric that Dana and I had chosen and obtained a swatch of is no longer available! We've had to go back to the drawing board, which I think Dana has found quite frustrating. I've got a slightly more philosophical attitude about it...

Anyway, we have chosen some likely swatches from the shops and we have arranged for the real estate agent to let us into the house to get a couple of quotes on Friday. I'm really excited about this, because it means that we should be able to get the curtains done fairly quickly after settlement, so we won't have to live with sheets on the windows for too long.

Here's one of the fabrics that Dana is quite keen on at the moment:

I might add some more after I've been home and seen what Dana has brought home from the curtain shops today.

House update

The last couple of weeks have actually been kind of a big deal for the house, but I've been too busy to blog about them. In roughly chronological order, we've visited a different mortgage broker on a colleague's recommendation, chosen and applied for a home loan with him, done the pre-settlement inspection of the unit and got the certificate of occupancy!

The last one happened late yesterday, and it means that the registration of the units plan should now be underway. That process should (fingers crossed, knock on wood, etc) take about 2-3 weeks, at which time the 14 day settlement period should begin. Which means that we should be taking possession of the house in 4-5 weeks, like forreal.

The house itself is pretty much complete, sans appliances and hot water system, which go in pretty much the day before settlement (otherwise they get nicked). This is a little unfortunate, as we were hoping that they would be in when the bank did their valuation (also this week), but we didn't really think we should hold off any longer.

More on the valuation and the loan and what it all means at a later day. Right now, I've got a date with a glass of beer.

As a wise woman once wrote: "It is a truth universally acknowledged, that a public servant in possession of a pay cheque, must be in want of the pub".

Ah yes, aint that fresh - everybody wants to get down like that

Good news house progress followers - the unit in our complex that went back on the market (for a substantially increased price - see previous posts) is now under offer! Hopefully this means it's selling for the ticket price on the site of $455k. This is pretty excellent for us, because ours is a slightly nicer place (on paper at least) and is a substantial increase in value from a year ago when it was first on offer.

I was fairly certain that the unit would sell for a fair bit more (given Canberra's crazy property market), but I worried that $455k was above what the market would pay.

In other news, there were some fairly fast paced changes at work last week that saw me start a new job on Monday morning, after finding out about it on Thursday. Its a position I had expressed interest in, so I see it as a positive move, but it's work that I've never done before, so I'm currently feeling a little out of my depth. This isn't aided by the fact that I don't actually have a director as yet (she hopefully will start next Monday) and that it is the first time I've moved to a completely new job since I joined the public service.

It does fulfill a personal goal I've had to be part of a "taskforce". Now all that's left is become a member of thinktank.

I'll leave you with a song that was stuck in my head and prompted me to listen to some hip hop today (and then go back to dark, dirty drum and bass).

Sometimes everything happens at once

Have been really busy at work with developments on a few things I work on. It's good to be busy again, but my head has been swimming a little bit trying to keep up. Watching the below video may help to put you in the same mind state:

On top of that, we've been meeting with a mortgage broker recently trying to work out which home loan to go with, and on top of that how we want to structure our finances when we get the house. While the second half of the sentence is still very much up in the air (making the first problematic as well) we did come to a very good conclusion while at the broker - we have enough money saved up now for a 20 per cent deposit (or for those who read my earlier musings on the subject, an LVR of 0.8)! This is very exciting, as it means that we don't have to worry about paying mortgage insurance, which was looking like at least $5k.

Looks like all that saving has been paying off! I'm glad, because I'm getting sick of tinned soup for lunch, and I'd hate to think that my tastebuds had been suffering for nothing.

However, it does mean we'll have less money left over to pay for all the other things that need to happen when we get in there. Our previous calculations had left us with plenty left over for the new couch we want to buy, the curtains, the aerial and the garden. It looks like I will be eating canned soup for lunch for a while longer.

The other alternative is that we opt for a loan where the lender takes a current market value of the property, rather than the contract price. While I had previously thought this was a fairly common place scenario, according to our broker, it actually narrows the choice of lenders quite a bit.

Decisions, decisions!

Minor house update (no pictures)

We did a quick trip up to the house on Sunday, not expecting any progress. We were pleasantly surprised to see that they had installed some of the cladding above the windows on our unit, and have started installing insulation.

What was slightly more interesting was seeing some of the progress on the other units. At least two of them were being painted and having the kitchens installed, as well as the tiling and the inside of the wardrobes. One of the most advanced has the same floor plan as ours (but mirrored) so we could get an idea of the kitchens.

I'm happy to report that they look quite good, with plenty of cupboard space (something that we lack right now) and a glossy white finish on the shelves and draws. I think it's going to look really good when the bench tops are on!

I'm really looking forward to our place catching up with that. Will try and get photos soon.

In other news, we're going to see our friendly mortgage broker (Gregor) tonight, which should be good. He was really helpful last year and I'm looking forward to see what he has to say tonight.

Property musings and economics 101.

You may recall a few weeks back I blogged about one of the units in our complex going back up for sale at a considerable increase over the initial price. The asking price at the time was 460k, a 16 per cent increase from the initial price of 395k a little over a year ago. At the time, I was quite chuffed, because I saw the listing as a possible indication of capital growth in our unit.

Unfortunately the property is still for sale and they've now dropped the asking price by 5k. See below for a screenshot of the listing.

I'm fairly novice at the property game, but around six weeks without an offer and a drop in price is not usually a really great sign. It seems that the vendor (who I think is probably still the developer, given the clauses in the contract about on selling before settlement) probably over valued the place a little.

Further examination of houses for sale in Franklin (see image below, click for a larger size) shows that there are three bedroom houses available for purchase for less than 460k. Perhaps it's not so surprising that the unit hasn't sold yet, given the obvious advantages the houses (and their land) have over the townhouse at a similar price.

However, it's also worth noting that all the three bedroom houses in a similar price range are under offer. I'm fairly hopeful that they'll go soon, and the unit in our complex will then be the most attractive (in terms of price at least) option in Franklin for a place with three bedrooms. Please note, I haven't really considered the two bedroom houses listed there as comparable properties - they're bloody tiny!

The length of time 7/56 Christina Stead St has been on the market may also reflect the general dip in the first home buyers market that was an inevitable result of phasing out the fist home buyers boost and rising interested rates. According to an article I read this morning on news.com.au, not only has there been a drop in the number of mortgages applied for recently, but the percentage of mortgages accounted for by first home owners has dropped from 28.2 per cent in May last year to 18.1 per cent in February this year.

It's all a bit of a balancing act really - the benefit of capital growth due to a strong market needs to be balanced against the increase in interest rates, and higher mortgage repayments. Fairly basic economics really, but something I'm still learning about now that I have a reason to maintain and interest about it.

Where this all comes back to me, as I mentioned in my initial post about unit 7, is that the price that this house go for may have an impact on how my unit is valued by the bank when we finally get a mortgage. If the house is valued at more than 80 per cent of our loan amount (we're aiming at 350k for reference) then we don't have to pay mortgage insurance. The ratio of the value of the property to the loan amount is one of my new favourite pieces of jargon about the property industry - the Loan Valuation Ratio, or LVR. According to my calculations, our property needs to be valued at approximately 440k to avoid mortgage insurance (i.e. 350/440 < .8).

So will someone please buy 7/56 Christina Stead Street already, for $440k or more. Please. You'll save me like $5k.

Week 22

There's nothing much new to report at the site. We're still waiting for the brickies to get round to our unit.

Some other exciting news - one of the other units is being advertised on Allhomes, and it's going for a good 16 per cent more than they were asking for it when we signed on for ours. If that's any indication of the capital gains already earned on our place we won't have to pay mortgage insurance and it's also quite a nice little gain!

Here's a screen grab of the listing.

For reference, this one was going for $395k in the middle of last year when we signed on for ours. It's now listed for $460k. I'm not sure why it's back on the market - maybe someone pulled out, or maybe it never sold the first time round. Either way, if it goes at that price, it bodes well for us! The unit is a bit smaller than ours and it doesn't have an attached garage.

First Home Owners Boost

For some reason Domain's property blog are reporting that the full First Home Owner's Boost will not be paid to people who haven't finalised their financed by the end of October 31 (and not just have a signed contract).

It think it's a bunch of crap, but read about it for yourself here: http://blogs.domain.com.au/2009/08/first_home_buyers_dont_have_un.html

Its in direct contradiction of both FHCSIA's and the ACT Govt's websites.

The only thing I can think of is that its worded a bit sloppily to mean that people who are purchasing an existing property need to have things finalised by 31 Oct to get the full amount, but that people who have entered into contracts to have something built should still be eligible.

More info from FHCSIA here: http://www.fahcsia.gov.au/sa/housing/payments/Pages/FirstHomeOwnersBoost.aspx

More info from the ACT Revenue Office here: http://www.revenue.act.gov.au/home_buyer_assistance/first_home_owner_grant

It has me in a bit of a flap!